Construction-to-Permanent Loans in Northern Virginia: 2026 Single-Close Guide

With a single-close loan, the lot, the build and the permanent mortgage are financed in one closing.

By Ken Byrne, NMLS #187129 · ALCOVA Mortgage LLC, NMLS #40508 · Updated September 2026

Building in Loudoun, Fairfax or Prince William means paying a builder over many months before there is a house to mortgage. A construction-to-permanent loan, also called a single-close or one-time close loan, solves that with one loan that funds the build in stages and then converts to a 15 or 30 year mortgage. This guide covers how the loan works, what Fannie Mae, FHA and VA actually require in 2026, what you pay during the build, and the Virginia rules on builders and liens you should know. To talk through financing options for your build, contact the Ken Byrne Team.

What is a construction-to-permanent loan?

It is one loan with two phases. In the construction phase, the lender pays the builder in draws as work is completed and inspected. When the home is done, the loan converts to permanent financing on terms set at the original closing. Fannie Mae’s rules describe it this way: because the loan documents already specify the permanent terms, the construction loan converts automatically when construction is complete.

Fannie Mae Selling Guide B5-3.1-01 and B5-3.1-02; CFPB, TILA-RESPA guide for construction loans (2019). The comparison of risks is general information.

How the single close works under Fannie Mae rules

You must hold title to the lot, either one you already own or one bought as part of the loan. The lender manages payments to the builder. No single construction period can run longer than 12 months, and the total cannot exceed 18 months. At conversion, only the interest rate, the loan amount, the term, and a change from an adjustable to a fixed rate are allowed, and a higher loan amount can only cover documented increases in construction cost.

Attached condo units and co-ops cannot be financed this way. Before the loan is sold to Fannie Mae, the work must be finished and paid for, every mechanics’ lien must be cleared, and the lender needs a certificate of occupancy. How the CFPB treats these loans also matters for your paperwork: a lender may disclose a construction-to-permanent loan as one transaction or as two.

Fannie Mae Selling Guide B5-3.1-01 and B5-3.1-02 (May 2026); CFPB construction loan disclosure guide.

Construction loan options in 2026

Fannie Mae Eligibility Matrix (August 5, 2026); HUD Mortgagee Letters 2010-29, 2019-08 and 2025-23; VA.gov loan limits and purchase loan pages; FHFA 2026 conforming loan limits. The 3% option does not apply to high-balance loans above $832,750.

FHA allows you to act as your own general contractor only if you are a licensed general contractor yourself. The same one closing structure, upfront premium and annual premium apply as on any FHA loan, and the loan is not eligible for FHA insurance until after the final inspection or certificate of occupancy, whichever is later.

For veterans, VA lists building a new home as an eligible use of the benefit. Since March 31, 2025, VA no longer requires a VA-issued builder ID for new construction; it relies on local building inspections and a 1-year or 10-year construction warranty. Not every lender makes VA construction loans, so ask early. How entitlement and the funding fee work is on our VA loans page.

Many Northern Virginia custom builds land above $1,249,125. Those need a jumbo construction loan, where the down payment, reserves and credit rules are set by each lender. Our guide to jumbo loans in Northern Virginia explains how they are underwritten.

What credit score do you need for a construction loan?

Less than many articles claim, at the program level. Fannie Mae’s Desktop Underwriter stopped requiring a minimum 620 score for new loan files in mid-November 2025. FHA allows maximum financing from a 580 score and 90 percent financing from 500 to 579. VA’s regulation sets no minimum score. In practice, many lenders set higher minimums for construction loans because of the added risk, so the score you need depends on the lender.

Fannie Mae DU release notes (November 2025); HUD Mortgagee Letter 2010-29; 38 CFR 36.4340.

Does the land you already own count toward the down payment?

It can. Under Fannie Mae rules, if you held title to the lot before the first construction advance, the loan is measured against the as-completed value of the lot and the house, so equity in the lot works like a down payment. If you buy the lot as part of the loan, the lender uses the lower of the lot price plus construction cost or the as-completed value. FHA values land you have owned for six months or less at the lower of its cost or appraised value.

Fannie Mae Selling Guide B5-3.1-02; HUD Mortgagee Letter 2019-08.

What you pay during the build

Construction-phase payments are usually interest only, charged on the money advanced so far. Here is an example: a $300,000 lot and a $600,000 build in Loudoun County, 10 percent down, and an $810,000 loan. The loan funds $210,000 of the lot price at closing, then pays the builder in five draws.

Illustration at 7.03 percent, the Freddie Mac 30-year average on September 24, 2026. Construction rates, draw counts and how interest is charged vary by lender; some charge on the full commitment. Property tax and insurance are not included.

After conversion, principal and interest on $810,000 over 30 years at the same rate is $5,405 a month, before property tax, homeowners insurance and any HOA dues. Plan for the draw inspection fees your lender charges, and for a contingency in your builder budget, since changes after closing are hard to finance.

Virginia charges recordation tax on the deed of trust: $0.25 per $100 of the loan, or $2,025 on $810,000, plus up to one third more where the county levies its local share. What else buyers pay at settlement is in our guide to closing costs in Virginia.

Va. Code 58.1-803 and 58.1-3800.

Draws are paid as each stage passes inspection, so interest grows as the house goes up.

FHA and VA payments on a $600,000 lot and build

For a $150,000 lot and a $450,000 build, here is how the permanent payment compares at the same 7.03 percent rate, principal and interest only.

HUD Mortgagee Letter 2023-05 (annual premium 0.55% for this loan size and down payment); VA.gov funding fee table. Veterans exempt from the funding fee would pay about $4,004.

The VA funding fee changes with prior use and down payment, and veterans receiving VA disability compensation do not pay it. See our VA funding fee guide.

The construction-to-permanent process, step by step

Fannie Mae Selling Guide B5-3.1-02; VA builder registration; HUD Mortgagee Letter 2019-08.

If the completion report shows the value has dropped, Fannie Mae requires a new appraisal and requalification at the new loan-to-value ratio. FHA requires the builder and buyer to sign a one-year Warranty of Completion of Construction (form HUD-92544, the same form as VA 26-1859); VA accepts a one-year builder warranty or a 10-year protection plan.

Northern Virginia rules on builders, liens and occupancy

Check the builder’s license class

Virginia requires a Class A contractor license for a single contract of $150,000 or more, Class B from $30,000 up to $150,000, and Class C from over $1,000 up to $30,000. A whole-house build will almost always need Class A. You can look up any contractor’s license and class on the Virginia Department of Professional and Occupational Regulation website.

Va. Code 54.1-1100.

Know how mechanics’ liens work

A contractor or supplier who is not paid can file a mechanics’ lien on your home, no later than 90 days from the last day of the month in which they last worked, and no later than 90 days after the home is finished or the work otherwise ends. On a one or two-family home, the building permit can name a mechanics’ lien agent, and subcontractors and suppliers must then notify that agent within 30 days of starting work to keep full lien rights. Draw inspections and lien waivers protect you, and liens must be cleared before a Fannie Mae loan can be sold after conversion.

Va. Code 43-4 and 43-4.01.

Occupancy approval

In Fairfax County, the final approval is a Residential Use Permit, the county’s residential certificate of occupancy, issued after the required building and trade inspections pass. Loudoun County issues an occupancy permit for new construction. Budget time for these final steps, since conversion waits for them.

Fairfax County Land Development Services; Loudoun County Building and Development.

Building new is not the only way to get the home you want. If you would rather buy an existing house and improve it, compare the options in our guide to home renovation loans.

Mistakes to avoid

How much to put down on a new build, and how that changes mortgage insurance, is covered in our guide to how much down payment you need.

Frequently asked questions

What is a construction-to-permanent loan?

A single loan that pays for the lot and construction in stages, then converts to a regular 15 or 30 year mortgage when the home is finished, with one application and one closing.

How does a construction-to-permanent loan work?

The lender pays the builder in draws after inspections, you usually pay interest only on the amount drawn, and when the home is complete the loan converts to permanent payments on terms set at closing.

What is a single close construction loan?

Another name for a construction-to-permanent loan. You close once, instead of closing a construction loan and then a separate mortgage.

How much down payment do I need to build a house?

As little as 3 to 5 percent on a conventional loan within the conforming limit, 3.5 percent on FHA with a 580 score, and nothing on VA with full entitlement. Equity in a lot you already own can count. Lenders may require more on construction loans.

What credit score do I need for a construction loan?

The programs set low floors: FHA allows 580 for maximum financing and VA sets no minimum, and Fannie Mae’s automated system no longer requires 620. Many lenders set higher minimums for construction loans.

Can I use a VA loan to build a house in Virginia?

Yes. VA lists building a new home as an eligible use, with no down payment if you have full entitlement. VA relies on local inspections and a builder warranty, and not every lender makes VA construction loans.

What is the construction loan limit in Northern Virginia in 2026?

$1,249,125 for a one-unit home on conventional and FHA loans in Fairfax, Loudoun, Prince William, Arlington and Alexandria. VA has no limit with full entitlement. Larger builds need a jumbo loan.

How long can the construction phase last?

On a Fannie Mae single-close loan, no single construction period can exceed 12 months and the total cannot exceed 18 months. Other programs and lenders set their own limits.

Can I be my own general contractor?

On FHA, only if you are a licensed general contractor. For other programs, ask the lender; most require a licensed builder.